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Rising relative prices or inflation: why knowing the difference matters

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  • Owen F. Humpage

Abstract

Almost everyone uses the word inflation to refer to any increase in prices, but it ought to be reserved for a just one kind of price increase. True inflation has a different cause?and a different cure?than the price increases of goods and services caused by constantly changing supply and demand conditions. The Federal Reserve can and should act to control inflation, but when relative-price changes are putting pressure on businesses and consumers, the Fed can do little.

Suggested Citation

  • Owen F. Humpage, 2008. "Rising relative prices or inflation: why knowing the difference matters," Economic Commentary, Federal Reserve Bank of Cleveland, issue Jun.
    • Handle: RePEc:fip:fedcec:y:2008:i:jun
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    Cited by:

    1. de Mendonça, Helder Ferreira & Garcia, Pedro Mendes, 2023. "Effects of oil shocks and central bank credibility on price diffusion," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 304-317.
    2. Mousnad, Mohamed Awad & Shafie, Asrul Akmal & Ibrahim, Mohamed Izham, 2014. "Systematic review of factors affecting pharmaceutical expenditures," Health Policy, Elsevier, vol. 116(2), pages 137-146.
    3. Pierpaolo Andriani & Ayfer Ali & Mariano Mastrogiorgio, 2017. "Measuring Exaptation and Its Impact on Innovation, Search, and Problem Solving," Organization Science, INFORMS, vol. 28(2), pages 320-338, April.
    4. Apaitan, Tosapol & Disyatat, Piti & Manopimoke, Pym, 2020. "Thai inflation dynamics: A view from disaggregated price data," Economic Modelling, Elsevier, vol. 84(C), pages 117-134.

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